Posts Tagged ‘Keynsianism’

“With regards to my point on the depression, I have found the following quote from then Treasury Secretary, Andrew Mellon, made in 1930. His suggestion as a means to deal with the great depression was for the Fed to: “Liquidate labor, liquidate stocks, liquidate real estate… values will be adjusted, and enterprising people will pick up the wreck from less-competent people.” In other words, leave it to the market. As can be seen, this failed miserably, with improvement only really occurring around 1933 when government action was taken.”

This was later clarified with:

“I agree, spending did not lead to a remarkable recovery. It did, however, lead to a short term recovery. “

“We have tried spending money. We are spending more than we have ever spent before and it does not work. . . . I say, after eight years of this administration, we have just as much unemployment as when we started . . . and an enormous debt to boot.”

— FDR Treasury Secretary Henry Morgenthau on May 9, 1939

On another note, people who support either Rudd’s or Obama’s stimulus packages would be a lot more convincing if they could cite a single example in the history of the world where a government increased spending and this led to increased jobs, income and wealth on any sustainable basis.

A good introduction on Keynsian stimulatory policy (and why it doesn’t work) here:

Update: On reflection, my snide remarks about UQLC were completly uncalled for in this forum. I should not fall into the trap of stereotyping an individual on the basis of a collective, nor using this to make cheap political shots. Mr. Trout’s comments so far – whilst wrong – certainly are well thought out and deserving of more. Sorry.

Having already broken his promise to cut taxes, in an essay to be published in the next edition of leftist-magazine The Monthly, Prime Minister Rudd has launched an unprecedented attack on the free market, positioning himself far to the economic left of even Labor Prime Ministers Bob Hawke and Paul Keating.

“The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes,” he writes of those who placed their faith in the corrective powers of the market.

Mr Rudd writes in The Monthly that just as Franklin Roosevelt rebuilt US capitalism after the Great Depression, modern-day “social democrats” such as himself and the US President, Barack Obama, must do the same again. But he argues that “minor tweakings of long-established orthodoxies will not do” and advocates a new system that reaches beyond the 70-year-old interventionist principles of John Maynard Keynes.

“Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself.”

I repeat: “advocates a new system that reaches beyond the 70-year-old interventionist principles of John Maynard Keynes.”

In a little over a year, Kevin Rudd transformed from an economic conservative, to an unabashed socialist, dreaming of government interfering in every aspects of our lives.

Update: You can read the first 1500 words online here. It begins “From time to time in human history there occur events of a truly seismic significance, events that mark a turning point between one epoch and the next, when one orthodoxy is overthrown and another takes its place…” Not one for hyperbole is he?

Update 2: To his credit, Rudd does not embrace protectionism. Not that that’s suprising considering the overwhelming bipartisan consensus that thinking rationally on this issue has at home.

Update 3: I recall that Alex Hawke MP, Federal Member for Mitchell “was once thrown out of [a high school] class for telling a teacher there was more to economics than Keynes.” I fully expect him to deliver the same message – in the same style – to Prime Minister Krudd.

Update 4: “Ironically, it falls to social democracy to prevent liberal capitalism from cannibalising itself”: Does this remind anyone else of “We had to burn down the villiage in order to save it”?